Posts tagged with: price controls

After declaring a state of emergency in the wake of Hurricane Sandy, New Jersey Governor Chris Christie issued a forceful reminder to merchants: Price gouging during a state of emergency is illegal and will result in significant penalties.

Price gouging—raising prices during an emergency condition over their normal level—is illegal in many states. But is it unethical? Jordan Ballor addressed that question in 2005 after Hurricane Katrina:

Turns out that cronyism hits more than just your pocketbook. There’s a good chance it’s hitting your waistline too.

That’s the takeaway from this editorial by Charles Lane. You see, cheese is one of the highest fat foods we eat, and our country overproduces cheese because of government created market distortions.

Charles Lane points out how price supports for milk lead to an overproduction of milk. We have more milk than we would ever drink in its liquid form. So where does all the surplus go? It gets turned into butter and cheese. Basically, because milk is overproduced, the cost of producing other dairy products declines, lowering prices for consumers and increasing the amount of cheese that is consumed.

Which sounds great, until you remember we have an obesity problem in the United States. And the fact that farmers are already better off than most families. Price supports, subsidies, and quotas all represent market distortions that benefit the politically connected, rather than representing what the people that make up the market really want. I guess we can be thankful the milk is at least used for something, unlike other cases of government managed food policy.

The point is, if we find ourselves concerned that the American diet is contributing to obesity, maybe we should first stop subsidizing it? As Lane concludes in his opinion piece:

When you think about it, the whole trillion-dollar farm bill amounts to a vast federal subsidy to this country’s sugary, starchy, cheesy diet, filled out with grain-fed beef, pork and chicken.

I love candy, pizza and hamburgers as much as the next guy. I just don’t see why businesses that profit by supplying that diet deserve an advantage over potential innovators and competitors. Still less do I see why they should get that advantage at taxpayer expense.

From the NYTimes: “Zimbabwe’s economy is so dire that bread vanished from store shelves across the country on Wednesday after bakeries shut down, saying government price controls were requiring them to sell loaves at a loss. The price controls are supposed to shield consumers from the nation’s rampant inflation, which now averages nearly 1,600 percent annually.”

From the poem, “The Incredible Bread Machine”:

Now bread is baked by government. And as might be expected, Everything is well controlled. The Public well protected.

True, loaves cost a dollar each, But our leaders do their best! The selling price is half a cent. Taxes pay the rest.